• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

Congratulations to Jamil from Pakistan and Jeeva from Malaysia - Global Prize winners!
see all ACCA December 2022 Genius Hunt Competition winners >>

Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>

Valuation method

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Valuation method

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • September 7, 2021 at 5:37 pm #634782
    AshleyMarc1997
    Member
    • Topics: 48
    • Replies: 24
    • ☆☆

    Is it correct that the Net Asset Value method is the minimum price that the owners are prepared to accept for the company?

    However, the PE ratio or Dividend Valuation Method is used to find out the share price of the company which is the maximum price that the owners are prepared to accept for the company?

    Lastly, the Net Value method, PE ratio, Dividend Valuation Method are all the methods to find out the share price which can be used for business valuation purposes.

    Please tell me which method is considered to be most accurate in real life and how the maximum & minimum prices are evaluated at the time of selling the company?

    September 8, 2021 at 6:20 am #634824
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51576
    • ☆☆☆☆☆

    You can never definitely state a minimum or maximum price – they are all something to be able to discuss.

    However the net asset value is going to be the very minimum the owners will accept (because the could get the same amount by simply closing and selling off the assets) assuming it is an unquoted company. If it is a quoted company then they are going to want at least whatever the current market value is of the shares.

    There is no such thing as an ‘accurate’ market value but using PE ratios is the most common in real life. The dividend valuation model is theoretical and is used to explain why the market values of shares are what they are, but the problem in practice is estimated future expected dividends and determining the required rate of return.

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

ACCA News:

 

ACCA My Exam Performance for non-variant Applied Skills exams is available NOW

NEW! Download the ACCA Pass Guide

FREE Verifiable CPD for ACCA Members

ACCA mock exams and debrief videos

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

Donate

If you have benefited from OpenTuition please donate.

ACCA CBE 2023 Exams

Instant Poll * How was your exam, and what was the result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • Iby2012 on Introduction to Financial Accounting – ACCA Financial Accounting (FA) lectures
  • Iby2012 on Introduction to Financial Accounting – ACCA Financial Accounting (FA) lectures
  • Iby2012 on Introduction to Financial Accounting – ACCA Financial Accounting (FA) lectures
  • baraka42 on PM Chapter 13 Questions Standard Costing and Basic Variance Analysis
  • baraka42 on PM Chapter 13 Questions Standard Costing and Basic Variance Analysis

Copyright © 2023 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy